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Real Estate - Definition Exam prep
questions with correct solutions.
Qs A deed that contains no warranties, but in which the grantor does give up his own rights or claims, is known as: 1 the granting clause 2 a deed restriction 3 words of conveyance 4 a quitclaim deed - n Ans✔ a quitclaim deed "A quitclaim deed is one in which NO guarantees are offered about past claims to the property, with the exception of those held by the grantor. Deed restrictions can impose various limitations and conditions on the uses for which a property can be utilized; and the granting clause and words of conveyance are the same thing - this grants the intention to transfer or convey the property's ownership." Qs If one creditor is substituted for another, with the substituted person succeeding to the legal rights of the original creditor, this is known as: 1 the granting clause 2 subrogations 3 subordinate agreements 4 a judgment - n Ans✔ subrogation "Subrogation is often used by title insurers to acquire rights to sue from the injured party (to recover claims they've paid). Don't confuse this with a judgment, which is a court decree ordering money to be paid; a subordinate agreement, which changes the priority of the liens to be paid under certain conditions, and granting clauses, which have to do with transferring property ownership."
Qs The joint ownership that is recognized in some states, of property acquired by husband and wife during marriage, is known as: 1 tenancy in common 2 tenancy by the entirety 3 joint tenancy 4 severalty - n Ans✔ tenancy by the entirety "With tenancy by the entirety, when one spouse dies, the surviving spouse then owns the property. Don't confuse this with tenancy in common, which means the person owns an undivided interest in the property; severalty, which is ownership by one person only, or joint tenancy, which is a more general term describing the ownership of property by two or more people." Qs
- A type of value estimate approach, in which value equals the estimated land value plus reproduction costs of any improvements, after the depreciation costs have been subtracted, is called the: 1 income approach 2 substitution approach 3 cost approach 4 market approach - n Ans✔ cost approach "The cost approach is what is described here - it estimates the amount needed to reproduce or replace the property. Don't confuse this with the income approach, used for investment properties, the comparative market analysis, which compares recently sold, similar homes, or substitution, which isn't an appraisal approach, but is an economic principle comparing two similar homes."
Qs If a landlord breaches a lease by allowing the property to fall into severe disrepair, which causes her tenant to leave the property because it is uninhabitable, this is known as: 1 constructive eviction 2 termination of lease 3 breach of lease 4 actual eviction - n Ans✔ constructive eviction "In a constructive eviction, it is the LANDLORD breaching the lease, rather than the tenant. In an actual eviction, it is the tenant breaking the lease. Neither termination of lease (which is simply the expiration of the lease), or breach of lease (the tenant's failure to follow any lease provision) is a form of eviction." Qs The type of lease that allows for the rent to be increased or decreased periodically based on changes in the government cost-of-living index is known as a: 1 assignment lease 2 index lease 3 graduated lease 4 percentage lease - n Ans✔ index lease "An index lease allows for increases OR decreases in the rent dependent on the cost-of-living index. Don't confuse this with a graduated lease, which only allows for INCREASES in rents; assignment leases, which is subleasing; or a percentage lease, which provides for a minimum fixed rental fee plus a percentage of the tenant's business income." Qs The type of lease that allows for the step-up of rent payments and is used to attract tenants to difficult-to-rent properties is called a:
1 assignment lease 2 index lease 3 graduated lease 4 percentage lease - n Ans✔ graduated lease "A graduated lease allows for a periodic increase in payments. Don't confuse this with an assignment lease, which is subleasing; a percentage lease, which provides for a minimum fixed rental fee plus a percentage of the tenant's business income; or an index lease, which allows for both increases AND decreases in rent based on the cost-of-living index" Qs In a lease, the lessor's interest is known as the: 1 assignment 2 subleasing 3 leasehold interest 4 leased fee interest - n Ans✔ leased fee interest "The leased fee interest is the lessor's interest, while the leasehold interest is the LESSEE'S interest. Remember that both subleasing and assignment are the same thing - simply the option to transfer all or a portion of a lease to another person." Qs A court order that authorizes and directs the proper officer of the court to sell the property of a defendant as required by the judgment or decree of the court is known as: 1 actual eviction 2 constructive eviction 3 a writ of execution 4 a writ of attachment - n
Qs A type of junior mortgage in which the existing mortgage amount, plus any additional purchase funds, is loaned to a buyer by the seller is known as: 1 wraparound mortgage 2 a voluntary lien 3 a writ of execution 4 a writ of attachment - n Ans✔ wraparound mortgage "Remember that a wraparound mortgage "wraps around" -- in other words, another lender, usually the seller, finances a borrower by lending an amount over and above the existing first mortgage amount without disturbing the first mortgage. Remember that a voluntary lien refers to ALL liens undertaken voluntarily by the owner (mortgages are only ONE type of such lien), while a writ of attachment and writ of execution are legal actions taken by the courts regarding a particular property." Qs The seller under a land contract is also known as: 1 leaser 2 the vendor 3 leasee 4 the vendee - n Ans✔ the vendor "A vendor is a seller under a land contract, while a vendee is a buyer. Neither a leaser nor a leasee has anything to do with land contracts." Qs
- A written document that provides for the transfer of title of property owned by the deceased is a(n): 1 will
2 intestate 3 testator 4 testate - n Ans✔ Will "A will transfers the title to property owned by the testator, or the deceased. Remember that testate and intestate simply refer to the fact of whether a person died WITH a will (testate) or without one (intestate). A testator is the PERSON who makes the will." Qs
- An exercise of police power by a municipality to regulate and control the character and use of the property is called a(n): 1 surrender 2 riparian rights 3 littoral rights 4 zoning ordinance - n Ans✔ zoning ordinance "A zoning ordinance is an exercise of police power. Remember that both littoral and riparian rights concern water; while surrender is the cancellation of a lease." Qs
- A one-sided contract is known as a: 1 voluntary lien 2 involuntary lien 3 bilateral contract 4 unilateral contract - n Ans✔
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- With this type of contract, two or more parties are bound to act as described in the contract.This is called a: 1 involuntary lien 2 voluntary lien 3 bilateral contract 4 unilateral contract - n Ans✔ bilateral contract "A bilateral contract is TWO- (or more) sided, as the prefix indicates. Remember that a unilateral contract is ONE-sided (think uni- as the prefix meaning "one"). Liens are not contracts, so neither voluntary nor involuntary liens apply in this case." Qs
- A term used to refer to any document that transfers title to real property is known as72. A term used to refer to any document that transfers title to real property is known as: 1 counteroffer 2 consideration 3 conversion 4 conveyance - n Ans✔ conveyance "Conveyance describes any act of transferring. Don't confuse this with conversion, which is simply changing the status of a property; consideration, which is something of value given to induce a party into a contract; or counteroffer, which happens BEFORE the purchase agreement is completed." Qs
- A new offer made in response to an offer received is a(n):
1 counteroffer 2 contingency 3 consideration 4 conveyance - n Ans✔ counteroffer "A counteroffer actually rejects the original offer, and takes its place. Don't confuse this with conversion, which is simply changing the status of a property; consideration, which is something of value given to induce a party into a contract, or conveyance, which is the act of transferring property." Qs
- The parts of the property that are necessary or convenient to the existence, maintenance and safety of a condominium and are normally in common use by all of the condo residents are known as: 1 covenant 2 conveyance 3 common elements 4 community property - n Ans✔ common elements "Each condo owner has an undivided ownership interest in the common elements. Examples are: the pools, tennis courts, game rooms, parking areas and exterior of the building." Qs
- The appraisal principle that states that the value of any component of a property is what it gives to the value of the whole or what its absence detracts from the whole is called: 1 contribution 2 competition 3 anticipation
reversionary right is the return of the rights of possession of the property to the lessor at the end of a lease." Qs
- A person who dies without leaving a will is known as having died: 1 reversionary interest 2 reversionary right 3 intestate 4 testate - n Ans✔ intestate "Remember that INTESTATE is WITHOUT a will, while testate is with a will. Don't confuse these terms with reversionary interest, which is the future interest that reverts to a grantor or his heirs, or reversionary right is the return of the rights of possession of the property to the lessor at the end of a lease." Qs
- The appraisal principle that follows the interrelationship of the supply of and demand for real estate is called: 1 supply and demand 2 competition 3 anticipation 4 conformity - n Ans✔ supply and demand "The principle of supply and demand is based on economic concepts, and says that real property is subject to the influences of the marketplace. Don't confuse this with the other principles of value - conformity, which says that the maximum value is realized if the use of the land conforms to existing neighborhood standards; anticipation, which says that the value can increase or decrease in anticipation of some future benefit/problem affecting the property; or competition, which says that excess profits will attract competition."
Qs
- The return of the rights of the possession and quiet enjoyment to the lessor at the expiration of a lease is known as: 1 remainder estate 2 reversion 3 reversionary right 4 reversionary interest - n Ans✔ reversionary right "Reversionary rights REVERT back to the lessor at the end of the lease. Don't confuse this with reversion, which is the PROCESS by which the remnant reverts to the grantor; reversionary interest, which is the future interest that reverts to a grantor or his heirs; or remainder estate, which is that which is left from a life estate." Qs
- The remnant of an estate that the grantor holds after he's granted a life estate to another person, if the estate will return to the grantor, is called: 1 remainder estate 2 reversion 3 reversionary right 4 reversionary interest called - n Ans✔ reversion "Try to remember reversion is in regard to the remnant reverting to the grantor, or reverter. Don't confuse this with reversionary interest, which is the future interest that reverts to a grantor or his heirs; reversionary right, which is the return of the rights of possession of the property to the lessor at the end of a lease; or remainder estate is that which is left from a life estate." Qs
3 covenant of further assurance 4 covenant of seisin - n Ans✔ covenant of quiet enjoyment "Covenant of quiet enjoyment basically means that the grantee has the right to enjoy his property without being challenged. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it ; the covenant of further assurance, which tells the grantee he has what he needs to make the title good, or the covenant against encumbrances, which offers protection against encumbrances." Qs
- In this situation, the grantor promises to obtain and deliver any instrument needed to make the title good is the: 1 covenant of further assurance 2 covenant of quiet enjoyment 3 covenant against encumbrances 4 covenant of seisin - n Ans✔ covenant of further assurance "To remember this, keep in mind that this covenant ASSURES the grantee that he has what he needs to make the title good. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it; the covenant of quiet enjoyment, which says the grantee has the right to enjoy his property without being challenged; or the covenant against encumbrances, which offers protection against encumbrances." Qs
- A situation in which the grantor warrants that the property is free from liens and encumbrances is: 1 covenant against encumbrances
2 covenant of quiet enjoyment 3 covenant of further assurance 4 covenant of seisin - n Ans✔ covenant against encumbrances "This covenant is easy to remember, since the title is the same as what it protects against - encumbrances. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it; the covenant of further assurance, which tells the grantee he has what he needs to make the title good, or the covenant of quiet enjoyment, which says the grantee has the right to enjoy his property without being challenged." Qs
- The situation in which a grantor promises that if at any time in the future the title fails, he will be liable, is known as: 1 covenant of further assurance 2 covenant of quiet enjoyment 3 covenant of warranty forever 4 covenant of seisin - n Ans✔ covenant of warranty forever "Think of the covenant of warranty forever as what it literally is - a warranty that lasts forever. Don't confuse that with other "covenants" covered in these courses - the covenant of seisin, in which the grantor warrants that he is the owner of a property and has the right to convey it; the covenant of further assurance, which tells the grantee he has what he needs to make the title good, or the covenant of quiet enjoyment, which says the grantee has the right to enjoy his property without being challenged" Qs
- A point, line, or surface from which elevations are measured is known as the: 1 section
permanently affixed (and could be considered the opposite of personal property). Remember that a fixture is an article of personal property that has become permanently attached to land or a building, and then becomes a part of the real estate. While emblements are generally considered personal property, this term refers specifically to annual crops on a property." Qs
- The permanent right to use another's land for the benefit of a neighboring parcel is known as: 1 A license 2 An easement by necessity 3 An appurtenant easement 4 An easement in gross - n Ans✔ An appurtenant easement "Appurtenant easements are those for adjacent properties or neighbors, which run with the land. (Think of the A's -- Appurtenant = Adjacent (property) of another.) An easement in gross is the opposite of an appurtenant easement. A license isn't an easement at all, and an easement by necessity is, as the name states, NECESSARY (for another person to enter his own land by going through another's property). Qs
- The ownership of property by one person only is known as: 1 tenancy by entirety 2 tenancy in common 3 joint tenancy 4 severalty - n Ans✔ Severalty "Severalty is the correct answer -- think of its root word, "sever." Ownership is severed or separated from any form of co-ownership, while tenancy in common, joint tenancy and tenancy by the entirety are ALL forms of co-ownership."
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- A condensed history of a title to a particular piece of real estate, including a summary of the original grant, and all subsequent conveyances and encumbrances affecting the property, is known as the: 1 chain of title 2 certificate of title 3 evidence of title 4 abstract of title - n Ans✔ abstract of title "Again, you can remember this by remembering ANOTHER three As - An Abstract of title is a history of All recorded instruments Affecting the title to a piece of land. This can be sometimes confused with the chain of title, which only shows a record of ownership of the property. Evidence of title is the documentary proof of a good title to the property, while the certificate of title does not involve an abstract at all." Qs
- The illegal practice of inducing homeowners to sell their properties by making representations about the prospective entry of persons of a certain race/national origin into the neighborhood is also called: 1 steering 2 commingling 3 blockbusting 4 redlining - n Ans✔ blockbusting "It is easy to get the three Fair Housing violations of redlining, steering, and blockbusting confused, but think of "blockbusting" as "busting up a block" by trying in induce or force people to move out of their neighborhood (or block). (Commingling isn't a Fair Housing violation at all, but a violation involving finances.)"
